Encore! EP249: The War on Financial Toxicity in North Carolina as a Case Study Everybody Should Be Keeping Their Eye On, With Dale Folwell, North Carolina State Treasurer

So, let’s talk about North Carolina. What a weird outlier of the direction of other states getting active on their healthcare spend. I’m talking about Texas, Indiana, Wisconsin ... I’m naming so-called red states because the legislature in North Carolina is a Republican majority.

Gotta say, normally I’m down for a little weird. I find it mostly charming. But with the information I have at present about what’s going on in North Carolina, I don’t love this for you. And when I say “you,” I pretty much mean any family who happens to live in North Carolina or any businesses in North Carolina trying to afford their employee health benefits right now. This whole shebang and the reason I’m covering this on Relentless Health Value is that it is also extremely relevant to anybody else in this country as a case study or a cautionary tale, depending on your point of view.

So look, there’s two pieces of legislation running through North Carolina’s Senate and House right now, but both of these pieces of legislation—one that Blue Cross Blue Shield (BCBS) is angling for and the other one that UNC, a big hospital chain in North Carolina is all hachi machi to get passed—both of these have precedents. Both of these things were done elsewhere, and the results were not great, to put it mildly.

BCBS wants to be able to open up a holding company that is able to take BCBS policyholder payments and invest them in for-profit ventures—BCBS being a nonprofit and all. Here’s a quote Chris Deacon mentioned on LinkedIn from an article on this topic:

“A 2019 examination of the aftermath of 11 conversions of BCBS affiliates showed that fully insured premiums increased roughly 13 percent … suggesting a post-conversion exercise of market power. Significantly, rivals of these large converting insurers also raised their prices following the conversions.”

And here’s a link to a Health Solutions podcast with Cristy Gupton, Chris Deacon, and North Carolina Commissioner Mike Causey.

So, that’s one of the pieces of legislation on the docket.

Then, on the hospital side of the equation, we also have a proposed bill that could give UNC Health Care a green light to expand and buy more physician practices and hospitals without as much oversight.

Proponents of the bill say that this will better enable UNC to take over struggling rural hospitals in danger of closing. Considering that UNC has already taken over rural hospitals in danger of closing, not exactly sure how or why basically removing federal and state antitrust scrutiny is helpful here. I went around looking for evidence that if you reduce antitrust scrutiny and enable more unfettered consolidation and expansion that population health outcomes improve. I could not find any. I did find lots of great talking points, but all of them seemed a little light on the evidence.

There is, however, an insane amount of evidence at this point that shows unfettered hospital chain consolidation harms local communities from a financial standpoint without improving the quality or outcomes of patient populations, especially when hospital chains, in conjunction with third-party payers, are not willing to share their pricing, even with their largest customer. But I’m getting ahead of myself, because this is exactly what I’m talking about in this 2019 interview with Dale Folwell, the state treasurer of North Carolina. And it is a doozie of a frustrating story, just to cut to the chase.

Look, you might be able to hear I definitely have an opinion formed on this topic, and I don’t want to sway yours until you look into all of this yourself. But I loved what Jeff Leston wrote the other day. He wrote, “The North Carolina Legislature proves that they report to the healthcare industry in the State, not the people who actually elected them.”

Okay … teeing up the interview today, this whole thing started when the North Carolina State Employees Health Plan (SEHP) crafted a proposal to pay network hospitals based on a transparent pricing schedule. Considering that SEHP purchases benefits for 720,000 people in North Carolina at a cost to taxpayers of billions of dollars, this seems reasonable. When you’re the fiduciary of thousands of dollars, let alone add six more zeros, it would seem to be nonnegotiable to actually see the numbers and not write a check to a black box. Nonetheless, a few of North Carolina’s largest hospital chains disagreed. They wanted to bill whatever they wanted to bill shrouded in a cloak of secrecy.

In this healthcare podcast, as I mentioned earlier, I am speaking with North Carolina State Treasurer Dale Folwell. This is a rebroadcast from an interview in 2019 but still, somewhat sadly, completely relevant.

You can learn more at nctreasurer.com.

You can also connect with Treasurer Folwell on Twitter at @DaleFolwell or on Facebook at Dale Folwell.

Dale R. Folwell, CPA, was sworn in as State Treasurer of North Carolina in January 2017. As the keeper of the public purse, Treasurer Folwell is responsible for a $100 billion state pension fund that provides retirement benefits for more than 900,000 teachers, law enforcement officers, and other public workers.

Under Treasurer Folwell’s leadership, the pension plan was rated among the top five highest funded in the country and won accolades for proactive management and funding discipline. In 2018, the state’s coveted AAA bond rating was reaffirmed by every major rating agency, making North Carolina one of only 13 states in the country to hold that distinction. Treasurer Folwell also oversees the State Health Plan, which provides medical and pharmaceutical benefits to more than 720,000 current and retired public employees and is the largest purchaser of healthcare in North Carolina.

Folwell was first elected to public office as a member of the Winston-Salem/Forsyth County Board of Education. He brought his problem-solving skills to the North Carolina General Assembly in 2004, where he served four terms in the House of Representatives, including one term as Speaker Pro Tempore.

Treasurer Folwell began his career as a blue-collar worker and became a Certified Public Accountant and investment advisor after earning bachelor’s and master’s degrees in accounting from UNC-Greensboro.

05:59 The North Carolina state spend on healthcare.

07:21 “In medical terms, why has this become acute?”

08:00 One week of work for starting North Carolina troopers and teachers out of every four is going to family healthcare costs.

09:14 The problem of health insurance vs healthcare.

09:59 “If they can do this to the largest customers in this state … imagine what they can do to them.”

10:20 “This is about the industry whose whole business model is based on secrecy.”

11:47 “We’ve already focused on the why, and now we’re [focusing] on the how.”

12:46 “We’re trying to attack a problem.”

15:46 What the Clear Pricing Project aims to do.

18:08 “We’re not trying to be disruptive; we’re trying to fix a problem.”

19:55 Why the Clear Pricing Project went the self-insured route and how that’s worked for them.

24:14 Who’s behind the institutions fighting transparent pricing in North Carolina.

25:15 Instances where the Clear Pricing Project could actually stand to help rural hospitals make more money.

27:29 Dale’s advice for other states trying to do this.

28:49 Dale’s message to healthcare providers out there who want to see this change to price transparency.

You can learn more at nctreasurer.com.

You can also connect with Treasurer Folwell on Twitter at @DaleFolwell or on Facebook at Dale Folwell.

Recent past interviews:

Click a guest’s name for their latest RHV episode!

Eric Gallagher, Dr Suhas Gondi, Dr Rachel Reid, Dr Amy Scanlan, Peter J. Neumann, Stacey Richter (EP400), Dawn Cornelis (Encore! EP285), Stacey Richter (EP399), Dr Jacob Asher, Paul Holmes